The Politics of it

June 5, 2012

The Government has to bring legislation to alter the ETS before parliament before the end of the year. The reason for this is that transition measures which reduced the obligation for emitters from one unit per tonne CO2 to one unit per two tonnes of CO2 are due to expire at the end of this year. The Government wants to extend the transition measures phasing them out over the next three years 2013 to 2015. There are some other substantial changes the Government wants to make eg auctioning units and a cap on how many international units an emitter can purchase.

The one change that is specific to farming is the entry date of biological emissions. The Government wants the ability to delay its entry for a maximum of 3 years passed 2015 and has set some criteria that have to be met before they enter. These conditions however are not satisfactory and under this proposed legislation will expire in 2018 and biological emissions will come in regardless of whether they have been met. (ability to mitigate etc). I can not understand the Governments rationale here, they are saying biological emissions should not enter the ETS until certain conditions apply but then come 2018, these conditions are mystically no longer relevant. There is no logic in what they propose.

The Ministry of Climate Change Issues is running a tight time frame with submissions now closed, the legislation will be drafted. Then the Government will have to get support from its coalition partners. I presume Peter Dunne will give his support, being a long time supporter of the ETS. The Maori Party will want a few beads and blankets for their IWI mate’s forestry interests in return for their support. At issue here is that the Government does not want to give forest owners of pre 1990 forests further compensation which was promised them for loss of land value. The loss in value was brought about by them not being able to change land use without financial penalty. As from 2013 they will be able to change land use by offset planting, so the Government argues they do not need further compensation.

These beads and blankets the Maori Party will want will be expensive so I am hoping that the government will prefer to get ACT Party support. The ACT Party has always voted against ETS legislation and are not predisposed to supporting John Key in this pointless and expensive folly of his. However unless this legislation is passed, biological emissions will come in to the ETS in 2015, they can not be delayed. . We have been lobbying the ACT Party on this. We want them to support the legislation and in return for their support negotiate a change in the criteria that must be met before livestock emissions are included in the ETS, so that NZ livestock will not be introduced into our ETS until our trading competitors do the same. We also want the extension of the delay in the inclusion of biological emissions to be indefinite rather than for a maximum of three years as the Government propose. I can not see why National would not agree to these entirely reasonable conditions. This is a small price to pay for the Government to get ACT Party support for its other changes.

There are factions within ACT that see farmers as a waste of time vote wise (two tick tories). Having pulled out all the stops at the last election with Don Nicolson high on the list and their anti ETS policies and RMA reform policies they did not get the farmer vote they thought they would. This faction within the Party are convinced that farmers will vote National no matter what John Key does to them. I think they are right to some extent, but in lobbying ACT to take up the farmers cause as opposed to negotiating for benefits for small business or the economy generally or not support the legislation at all, I pointed out that the ETS will hit farmers harder financially than their city counterparts. They could not pass on the costs to the consumer and that because of this farmers were more in tune with the legislation. They will at least notice what ACT has negotiated. There is also a strong farmer group within ACT, so I think the Party will try as hard as they can for these changes.

This legislation change will go unnoticed by the general population because it is too complex for most journalists and will receive no media coverage. People are also generally not interested which I find bizarre. It is illogical to me that people are so interested in the issues of the Chinese buying farms and the number of pokie machines in Sky City, neither of which will have any impact on them at all, but the ETS which is costing each and everyone money each week, is not on the radar.

Anyway the point is that it is not under the farmers radar and in lobbying ACT to take up the farmers cause, I made that point. We are working hard on this. I will let you know how we get on.

Comments

I agree that is bizarre how litttle attention is being paid to the ETS changes.

However I would be surprised and even disappointed if ACT chooses to support the government to save paying too many blankets to the Maori Party. The proposed amendments are only going to delay the full cost of the ETS for non livestock emissions from 2013 to 2015. Farmers carry a significant perceantage of this by the time transport and processing energy costs are passed on to them. These costs themselves are completely unjustified. At a carbon price of $20/tonne this will cost New Zealand consumers and businesses $750 million per year. Using the IPCC’s worst case scenario of six degrees of warming this century, if we were to eliminate all our carbon emissions other than those from livestock it would take more than a thousand years for the effect to be measurable.. Expressed another way, it would take $750 billion dollars to register the most miniscule of temperature changes.

But it is even more costly than that. There is physically no way the world will warm six degrees this century. Even the British Met Office and the University of east Anglai concede that there has been no significant warming for the last fifteen years. I haven’t had the chance to check it out, but I received an email today saying Bill English has said that ‘The consensus on climate change has almost disappeared.’ I would get ACT to hound them on this, particularly as Nick Smith promised in May 2010 that the ETS review would look at the changes in the science but then reneged on that promise in the terms of reference for the review.

Getting a pledge to leave out livestock until our trading partners do, is, I believe, dangerous. I have seen a draft paper that shows the carbon price in 2050 will be half what it would be otherwise if biological (rice and livestock) emissions were included than if they were not. Once this paper is released I am sure that some industrial countries will see opportunities to reduce their emissiosn costs by including their livestock, subsidising their farmers to cover the cost and them compelling us to follow if we have such a pledge on our staute books.

John Key spoke in Gisborne recently and said he believes the carbon price will not get back up to $20/tonne. If ACT want something to take to the Government they could ask that the cap be reduced to $15/tonne rather than the current $25. The best hope for the ETS is to get the price to zero so it all falls over.